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By Malcolm Stacey | Saturday 12 August 2017
Disclosure: I own shares in one or more of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Hello Share Crunchers. We have a little saying in our family. ‘There’s always something…’ Meaning, however well things seem to be going, there is invariably a major snag to contend with.
So there we are, all enjoying a bull market when most of our shares were worth more each succeeding day. And then North Korea threatens to plonk four nuclear missiles in the sea around the USA’s military base in Guam. Thank you very much, Kim.
Of course, none of this threat will actually happen. Tesco (TSCO) will still sell the same amount of food that it usually does. Next (NXT) will flog the same amount of gear. Whitbread (WTB) will still have the same number of Premier Inn guests.
So why should British shares fall like a sack of coal through a trough of blancmange on the Korean news? Because the big traders can make more money by selling shares as the crisis starts, only to buy ‘em back again more cheaply when the danger is past.
It’s why share prices fall at the very start of a war and shoot back up, once the conflict is under way. As it did during the Falklands crisis. And I understand, during World War 11.
There is also reason to believe that if conflict marches even closer between the USA and North Korea, that some commodities could rise in price. Perhaps oil. Perhaps minerals needed in munitions. Perhaps some foods.
Now there is the strategy whereby you could sell shares now and buy ‘em back when the Korean threat is out of the way. But that is a scary policy. And I usually ride out these world problems by hanging onto my shares until normality reigns again.
One thing I am fairly certain of, having been watching markets like a hawk for 30 years, is that wars and threats of wars may be a horrible thing. But share values will not normally be affected for long and may even rise as a result. That is not of course to welcome what is bubbling in Asia now.
And we all very much regret these stupid events in the Punter’s Return. God Bless.
Never miss a story.
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